Financial Health of Starbucks Coffee Presented By: Author Coffee House opened in 1971 in a small town in Seattle, Washington In 1987 Starbucks expanded.

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Presentation transcript:

Financial Health of Starbucks Coffee Presented By: Author Coffee House opened in 1971 in a small town in Seattle, Washington In 1987 Starbucks expanded beyond Seattle In 1996 Starbucks went international starting in Japan

Starbucks Liquid Ratios Current Ratio: ÷ =.798 times Quick Ratio: (1748 – 692.8) ÷ =.482 times Average Collection Period: ÷ (10383 ÷ 365) = days Days Inventory Held: ÷ ( ÷ 365) = days Days Payable Outstanding: ÷ ( ÷ 365) = Cash Conversion Cycle: – = days

Starbucks Activity Ratios Accounts Receivable Turnover: 10,383 ÷ = times Inventory Turnover: 4,645.3 ÷ = times Accounts Payable Turnover: 4,645.3 ÷ = times Fixed Asset Turnover: 10,383 ÷ = times Total Asset Turnover: 10,383 ÷ = times

Starbucks Leverage Ratios Debt Ratio: 3,181.7 ÷ 5,672.6 = 56% Long-Term Debt to Total Capitalization: ÷ ( ,490.9)= 18% Debt to Equity: 3,181.7 ÷ 2,490.9 = times Times Interest Earned: ÷ 53.4 = times

Starbucks Profitability Ratios Gross Profit Margin: 5,737.7 ÷ 10,383 = 55% Operating Profit Margin: 1,258.7 ÷ 10,383 = 12% Net Profit Margin: ÷ 10,383 = 3% Return on Total Assets (ROA): ÷ 5,672.6 = 5.5% Return on Equity (ROE): ÷ 2,490.9 = 12.6% Cash Return on Assets: 1,258.7 ÷ 5,672.6 = 22%

Industry Comparison Starbucks Debt/Equity Ratio 0.33 Current Ratio 0.9 Quick Ratio 0.6 Interest Coverage NA Leverage Ratio 2.1 Book Value/Share 3.50 Industry Debt/Equity Ratio 0.32 Current Ratio 0.9 Quick Ratio 0.7 Interest Coverage 0.0 Leverage Ratio 1.7 Book Value/Share 3.65

References Fraser, L. M., & Ormiston, A. (2007). Understanding financial statements (8th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall. MSN Money Central (2009). Starbucks Corp: Company Report. Retrieved July 14, 2010 from report?Symbol=US%3aSBUX report?Symbol=US%3aSBUX Starbucks Corporation (2009). Financial Statements. Retrieved July 14, 2010 from